Bitcoin rose above the $8,000 mark on Tuesday, extending a rally that has seen the digital currency more than double in value since the start of the year.

According to data posted on the website CoinDesk, bitcoin topped $8,325 before giving up some of its gains. Since the start of the year, bitcoin's value has increased more than 120%.

Bitcoin prices have yet to recover to its all-time highs of around $20,000 in late 2017 when a frenzy of interest from retail investors suddenly sent the value of cryptocurrencies dramatically higher.

Andy Brenner at National Alliance Securities said while it wasn't possible to confirm who is behind the direct flows of who is buying bitcoin, it looked logical that Chinese investors were using the digital currency as a means to diversify.

"We can see that the bid for bitcoin in this latest run has coincided with a big down tick in the value of the Chinese yuan versus the dollar," he said Monday in an email to CNBC.

Gandham said the bitcoin price has now hit a base value and now individual stories such as Samsung and HTC phones carrying bitcoin or Amazon marketplaces accepting the digital currency is starting to take effect on consumer acceptance.

Gandham added that rumors that Fidelity Investments, one of the largest asset managers in the world, will soon start crypto trading for institutional customers was also having a postive impact on price.

Meanwhile, digital currency critic David Gerard is ascribing bitcoin's recent run to trading moves by big holders of the digital currency who are putting the squeeze on short sellers.

In a blog post Monday, Gerard said "Whales" are buying up the market until short positions get forced out. At liquidation, short sellers then buy back at market price forcing a price spike as a wave of buying hits order books at the same time.

Gerard said the whales who guided the price higher then sell off at a profit.

The crypto specialist also linked the rise in bitcoin to an influx of dollar-substitute tokens called "tethers," which have supposedly been introduced into the digital market to inject liquidity. Tether is owned and run by the same people as crypto exchange Bitfinex.

However major questions exist over how realistically the value of a tether can be linked back to an actual dollar and Bitfinex is being investigated by the New York Attorney General.

Gerard said despite the big questions over the validity of the recent buying spree, he expected bitcoin and other cryptocurrencies to keep going up.

"Mainstream media coverage might lure fresh suckers in with actual cash money, not just tethers. I predicted there would be another mainstream crypto bubble — but I didn't expect it this soon."